- The Senate on Friday (February 22) approved legislation to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan State-owned oil and natural gas company, Petróleos de Venezuela (PDV) Caribe.
- This is primarily due to the imminent international obligations as stipulated by the International Maritime Organization regulations regarding sulphur, which will become effective on January 1, 2020.
- The Bill was passed in the House of Representatives on February 19.
The Senate on Friday (February 22) approved legislation to retake ownership of the 49 per cent shares in Petrojam held by the Venezuelan State-owned oil and natural gas company, Petróleos de Venezuela (PDV) Caribe.
The Compulsory Acquisition (Shares in Petrojam Limited) Act, 2019 was piloted by Minister of Foreign Affairs and Foreign Trade, and Leader of Government Business in the Senate, Senator the Hon. Kamina Johnson Smith.
In her address, Senator Johnson Smith said the decision to move in the current direction was in a bid to safeguard the country’s energy security, noting that Petrojam and Jamaica have been left at risk due to years of inaction.
She said the Government has explored several channels, which have proved unsuccessful to repurchase the shares.
“[We have] pursued several diplomatic initiatives at the highest level which have been unsuccessful and those include no less than four heads of government; [we have] written letters at the technical and ministerial levels across the years; [and] waited more than 12 years without no indication that the upgrade would be conducted or pursued under the agreement which exists,” she said.
The Leader of Government Business noted that without an upgrade, Petrojam would be unable to further process heavy fuel oil (HFO) into high-value products, and having lost a major customer in JPS, Petrojam would become unprofitable.
In addition, technical assessments have found that refining operations will be negatively impacted by 2020 if Petrojam is not in a position to execute Phase 1 of the refinery upgrade.
This is primarily due to the imminent international obligations as stipulated by the International Maritime Organization regulations regarding sulphur, which will become effective on January 1, 2020.
Senator Johnson Smith also cited the United States Executive Order 13808 dated August 24, 2017, which essentially prohibits United States persons from entering into specified transactions with the Government of Venezuela and any political division, agency or instrumentality thereof, including PDVSA.
“Having been advised that in no uncertain terms of the potential termination of services by suppliers and banks which would cripple the refinery and severely impact the Jamaican economy, the Government of Jamaica has reassessed it legal options. This is not a political issue for us, the Government is focused on Jamaica’s economic stability and our energy security which are necessary for the wellbeing of Jamaicans,” she stated.
The Leader of Government Business noted that the action to reacquire the shares does not reflect any change in Jamaica’s free market policies or belief and support in property rights.
“It is in no way intended to set a particular precedence for similar actions, it is drafted specifically. We are not acting prematurely or hastily, there has been too much time wasted already by previous administrations, so we are taking action now to make sure we have petroleum products to power our homes, schools, businesses, places of work and make sure we can get there to and from,” Mrs. Johnson Smith added.
She said while it is the first time a matter has arisen before the Parliament to acquire property in the nation’s interest in this way, it “does not mean that it is not the right action”.
“The Constitution of Jamaica clearly allows for it …the framers of the constitution considered the protection to be offered to a person’s property rights and decided that those rights should be protected in the Constitution through the payment of compensation which is provided for in the Bill before us,” she said.
The Bill was passed in the House of Representatives on February 19.